Why this three years old startup chose IPO and not VCs route for raising capital

SaleBhai

When you are an early stage startup especially in e-commerce segment, it is very rare that you look out for an IPO route to raise funds. But unusual things can be expected from young startups that tend to re-write the rule books in their respective domains.

Choosing a maverick path, mere three years old SaleBhai has filed a Draft Prospectus (DP) with the small and medium enterprise (SME) platform of the Bombay Stock Exchange (BSE).

“The decision to raise money from general public through an IPO was primarily based on backing and faith of diverse customers and a pool of investors (71 HNIs),” says Vishwa Vijay Singh, one of the co-founders of Ahmedabad-based startup.

Salebhai boasts of its customers as key drivers, who saw the potential in the unique proposition of its business and brand philosophy of taking diaspora communities back to their roots by providing them with authentic foods and other products sourced from India.

Was rejection from VCs a prime driver for exploring IPO route?

“We had two option- one was leading towards losing control of the firm by inviting VCs and other was to make more compliances and regulations. We zeroed on in latter option,” explains Vishwa.

For its upcoming IPO, Salebhai has issued 22,59,600 equity shares, offering 26.58 per cent of the company’s equity in the market.

Currently, it awaits BSE approval for Draft Prospectus (DP). “We are looking to raise Rs 23.73 crores through the process”,  says Vishwa.

Since its inception in September 2015, Salebhai has raised  Rs 11.7 crore risk capital from several high net worth individuals (HNIs).

The e-commerce firm intends to use proceedings from IPO towards acquiring customers, ramping up technological aspects, onboarding more sellers, and expanding into new categories.

Traction, financials and target audience

Founded in September 2015 by Vishwa and Purba Kalita, the firm claims to have recorded rapid growth in past couple of years. Its revenue kept rising from 3.7 lakh in 2016 to Rs 46.02 lakh in 2017 and to Rs 1.13 crore till Jan 2018.

Meanwhile, it eyes Rs 3.5 crore revenue in the current fiscal.

“We crossed 50,000 orders in December 2017 and as of February 2018, we already have over 1 lakh registered users and over 60,000 app downloads,” adds Vishwa.

The e-commerce marketplace focuses majorly on the requirements of diaspora communities across India and abroad. SaleBhai claims to offer products sourced from over 350 select vendors in 100 cities.

“Besides targeting diasporas, it lets users in India to discover and transact regional products”, says Vishwa.

Snacks and Dry Fruits : Bread & butter for SaleBhai

SaleBhai does not hold any inventory, warehouses, or logistics. As soon as a customer buys a product, the order flows into the seller’s panel. When the seller generates an invoice on the platform, a trigger goes to the logistics company for pickup and delivery.

Snacks and dry fruits contribute major percentage in sales (20 and 15 per cent respectively) for SaleBhai

It claims to snap up 27 percent average margin on transacted products. The e-commerce firm aims to add handloom and apparel lines in next two months.

“We want to double our base to 2 lakh customers by the end of current financial year. It is also aiming to end the year with a monthly dispatch of over 30000 units,” concludes Vishwa.

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